Frequently Asked Questions: Buyer's Stamp Duty (BSD)

FAQ : Buyer's Stamp Duty (BSD)

	Under what circumstances will BSD be payable?
	Who will be liable to pay the BSD?
	How to calculate BSD? What is the rate of BSD?
	Will BSD be applicable to a non-HKPR who has entered into a Provisional Agreement for Sale and Purchase (PASP) in respect of a residential property before 27 October 2012 and signed an Agreement for Sale and Purchase (ASP) on or after that date?
	How to determine whether a person is a HKPR or not?
	Whether a company whose shareholders and directors are all HKPRs is liable to BSD?
	Whether an agreement for sale signed by a non-HKPR to acquire a residential property and hold it as a trustee for a HKPR is subject to BSD?
	Whether the instrument for transfer of a serviced apartment is chargeable with BSD?
	Under what circumstances will BSD be exempted?
	If a residential property is acquired jointly by a HKPR and his/her spouse who is not a HKPR, will any BSD be payable?
	For stamp duty purposes, whether a parent-in-law will be regarded as a close relative?
	If a residential property is acquired by a HKPR and a non-HKPR who is not the HKPR's close relative, will only half of the price or the value of the property be chargeable with BSD?
	Mr. A, a HKPR, signed a PASP to purchase a residential property on 15 October 2012. The name of Ms. B (Ms. B is not a HKPR and not a close relative of Mr. A) was added to the ASP which was signed on or after 27 October 2012. Will Mr. A and Ms. B be liable to BSD?
	Mr. A, a HKPR, signed an ASP to purchase a residential property on 15 October 2012. The name of Ms. B (Ms. B is not a HKPR and not a close relative of Mr. A) was added to the assignment which was executed on or after 27 October 2012. Will Mr. A and Ms. B be liable to BSD?
	Mr. A signed a PASP to purchase a residential property on 15 October 2012. Subsequently on or after 27 October 2012, he nominated Mr. B (Mr. B is not a HKPR and not a close relative of Mr. A) to take up the ASP. Will Mr. B be liable to BSD?
	If a non-HKPR inherits a residential property from a deceased person's estate on or after 27 October 2012, will he/she be liable to BSD?
	Are Government Grants/Leases chargeable with BSD?
	Will any relief be given to a person who is not HKPR but acquiring residential property for redevelopment?
	Residential properties in a lot firstly acquired by several companies and then transferred to a company for redevelopment, will the BSD paid be refunded?
	Where residential properties in a lot are acquired by several companies for joint development, will the BSD paid be refunded?
	Will BSD be payable on an instrument of exchange under which a residential property is exchanged for another residential property?
	Will BSD be payable on an instrument of exchange under which a non-residential property is exchanged for a residential property?
	When should BSD be paid?
	Will the BSD paid be refunded if the buyer and seller cancel the agreement for sale after BSD was paid?

Questions and Answers

1.	Q:	Under what circumstances will BSD be payable?

	A:	Unless specifically exempted, BSD is payable on an agreement for sale or a conveyance on sale for the acquisition of any residential property if the residential property is acquired by any person (including limited company) on or after 27 October 2012, except a Hong Kong permanent resident (HKPR) acquiring the property on his/her own behalf (i.e. the person is both the legal and beneficial owner).

2.	Q:	Who will be liable to pay the BSD?

	A:	The buyer or the transferee is liable to pay the BSD.

3.	Q:	How to calculate BSD? What is the rate of BSD?

	A:	BSD is charged at 15% on the stated consideration or the market value of the property (whichever is the higher).

4.	Q:	Will BSD be applicable to a non-HKPR who has entered into a Provisional Agreement for Sale and Purchase (PASP) in respect of a residential property before 27 October 2012 and signed an Agreement for Sale and Purchase (ASP) on or after that date?

	A:	For BSD purposes, a PASP is a chargeable agreement for sale. The non-HKPR who entered into a PASP for purchase of a residential property before 27 October 2012 is regarded as having “acquired” the property before that date. Hence, BSD will NOT apply to the acquisition of the property.

5.	Q:	How to determine whether a person is a HKPR or not?

	A:	As all HKPRs are eligible to apply for permanent identity cards (PICs) under the Registration of Persons Ordinance (Cap. 177), for the purposes of BSD, HKPRs mainly include holders of valid PICs. HKPRs also include the aged, the blind or the infirm who are not required to apply for an identity card under regulation 25(e) of the Registration of Persons Regulations (Cap. 177A) and are entitled to be issued with a PIC if they make an application for a PIC.

6.	Q:	Whether a company whose shareholders and directors are all HKPRs is liable to BSD?

	A:	A limited company, regardless the residency status of its shareholders and directors, will be liable to BSD if it acquires a residential property on or after 27 October 2012.

7.	Q:	Whether an agreement for sale signed by a non-HKPR to acquire a residential property and hold it as a trustee for a HKPR is subject to BSD?

	A:	An agreement for sale signed by a non-HKPR in the capacity of a trustee on behalf of a HKPR is chargeable with BSD, unless the HKPR is a minor or a mentally incapacitated person.

8.	Q:	Whether the instrument for transfer of a serviced apartment is chargeable with BSD?

	A:	For stamp duty purposes, the classification of premises in terms of “residential property” or “non-residential property” is by reference to the permitted use rather than the actual use of the properties, or the label or description given to the properties. Unless there is documentary evidence (such as Government lease, occupation permit, etc) to show that the property cannot be used for residential purposes, the instrument signed by a non-HKPR as buyer for acquisition of the property will be chargeable with BSD.

Under what circumstances will BSD be exempted?

Under the Stamp Duty (Amendment) Bill 2012, it is proposed that BSD will be exempted under the following circumstances -

(i)	acquisition of a residential property by a HKPR jointly with a close relative or close relatives (i.e. spouse, parents, children, brothers and sisters) who is/are not HKPR and each of the purchaser is acting on his/her own behalf;
(ii)	transfer of a residential property to a close relative who is not a HKPR, or to close relative(s) jointly one or more of whom not being HKPR and each of the transferee is acting on his/her own behalf;
(iii)	nomination of a close relative(s) who is/are not HKPR to take up the assignment of a residential property and each of the nominee is acting on his/her own behalf;
(iv)	addition/deletion of name(s) of a person(s) who is/are not HKPR to/from a chargeable agreement for sale or a conveyance on sale in respect of a residential property if the person(s) is/are a close relative(s) of the original purchaser(s) and each of the person is acting on his/her own behalf;
(v)	acquisition or transfer of a residential property by a court order or pursuant to a court order, which includes a foreclosure order obtained by a mortgagee whether or not it falls under the definition of a financial institution within the meaning of section 2 of the Inland Revenue Ordinance;
(vi)	acquisition or transfer of a mortgaged residential property under a conveyance by or to a mortgagee which is a financial institution within the meaning of section 2 of the Inland Revenue Ordinance (Cap.112), or by a receiver appointed by such a mortgagee;
(vii)	acquisition or transfer of a residential property by or to a body corporate from an associated body corporate;
(viii)	acquisition of a residential property by a person to replace another residential property which was owned by that person and that has been purchased or acquired pursuant to redevelopment projects pursued by the Urban Renewal Authority, or is resumed under the Lands Resumption Ordinance (Cap. 124) or purchased under section 4A of that Ordinance, or is sold pursuant to an order for sale made by the Lands Tribunal under the Land (Compulsory Sale for Redevelopment) Ordinance (Cap.545) and the person is acting on his/her own behalf;
(ix)	acquisition or transfer of residential properties by or to the Government; and
(x)	gift of residential properties to charitable institutions exempted from tax under section 88 of the Inland Revenue Ordinance.

10.	Q:	If a residential property is acquired jointly by a HKPR and his/her spouse who is not a HKPR, will any BSD be payable?

	A:	Acquisition of residential properties by a HKPR jointly with a close relative (i.e. spouse, parent, child, brother and sister) who is not a HKPR and each of them is acting on his/her own behalf is not chargeable with BSD.

11.	Q:	For stamp duty purposes, whether a parent-in-law will be regarded as a close relative?

	A:	For stamp duty purposes, a parent-in-law is not regarded as a close relative.

12.	Q:	If a residential property is acquired by a HKPR and a non-HKPR who is not the HKPR's close relative, will only half of the price or the value of the property be chargeable with BSD?

	A:	If a residential property is jointly acquired by a HKPR and a non-HKPR, who is not a close relative of the HKPR, whether as joint tenants or tenants-in-common, the BSD will be payable on the stated consideration or full value of the property, whichever is the higher, regardless of the share of interest of the non-HKPR in the acquisition of the property.

13.	Q:	Mr. A, a HKPR, signed a PASP to purchase a residential property on 15 October 2012. The name of Ms. B (Ms. B is not a HKPR and not a close relative of Mr. A) was added to the ASP which was signed on or after 27 October 2012. Will Mr. A and Ms. B be liable to BSD?

	A:	In the above situation, Ms. B has acquired part of the property from Mr. A on or after 27 October 2012. As Ms. B is not a close relative of Mr. A, there will not be exemption from BSD. BSD is payable on the stated consideration or full value of the property, whichever is the higher, regardless of the share of interest of Ms. B in the acquisition of the property.

14.	Q:	Mr. A, a HKPR, signed an ASP to purchase a residential property on 15 October 2012. The name of Ms. B (Ms. B is not a HKPR and not a close relative of Mr. A) was added to the assignment which was executed on or after 27 October 2012. Will Mr. A and Ms. B be liable to BSD?

	A:	In the above situation, Ms. B has acquired part of the property from Mr. A on or after 27 October 2012. As Ms. B is not a close relative of Mr. A, there will not be exemption from BSD. BSD is payable on the stated consideration or full value of the property, whichever is the higher, regardless of the share of interest of Ms. B in the acquisition of the property.

15.	Q:	Mr. A signed a PASP to purchase a residential property on 15 October 2012. Subsequently on or after 27 October 2012, he nominated Mr. B (Mr. B is not a HKPR and not a close relative of Mr. A) to take up the ASP. Will Mr. B be liable to BSD?

	A:	In the above situation, Mr. B has acquired the property from Mr. A on or after 27 October 2012. As Mr. B is not a close relative of Mr. A, there will not be exemption from BSD. BSD is payable on the stated consideration or full value of the property, whichever is the higher.

16.	Q:	If a non-HKPR inherits a residential property from a deceased person's estate on or after 27 October 2012, will he/she be liable to BSD?

	A:	The non-HKPR is not liable to BSD as the residential property which is inherited from a deceased person's estate under a will, the law of intestacy or right of survivorship by a beneficiary is exempted from stamp duty.

17.	Q:	Are Government Grants/Leases chargeable with BSD?

	A:	All grants by the Government (including those by way of Government land sales) and all Government leases as provided in section 39(c) of the Stamp Duty Ordinance are not chargeable with stamp duty. "Stamp duty" is presently defined to include ad valorem stamp duty and special stamp duty. Subject to the passage of the relevant legislation, the term "stamp duty" would include the proposed Buyer's Stamp Duty which took effect from 27 October 2012.

18.

Will any relief be given to a person who is not HKPR but acquiring residential property for redevelopment?

Relief is given by way of refund of the BSD paid. A person can apply to the Collector of Stamp Revenue (“the Collector”) for a refund of the BSD paid upon completion of the redevelopment (with the issue of an occupation permit (OP) or the first OP in the entire redevelopment) if the following conditions are satisfied:

(a)	New building(s) (whether or not residential property) is/are constructed by the person on the lot(s) where the residential property consisted or formed part thereof:
	(i)	within 6 years after the person became the owner of the lot or the last lot if more than one lot; or
	(ii)	within such extended time for completion of the new building(s) as approved by the Lands Tribunal if the lot(s) was/were the subject of one or more than one order for sale made by the Lands Tribunal; or
	(iii)	within 6 years from the date of the instrument effecting the first lease modification
	whichever is the latest.
(b)	If the new building(s) is/are constructed on a new lot (granted by the Government in return of the whole or part of the lot(s)), the new building or first new building is completed within 6 years after the date on which the new lot was granted to the person.
If the residential property was subsequently transferred by a person (which is a body corporate) to an associated body corporate, the latter may also, under the aforesaid conditions, apply for a refund of the BSD paid by the former.

19.	Q:	Residential properties in a lot firstly acquired by several companies and then transferred to a company for redevelopment, will the BSD paid be refunded?

	A:	If the transferor companies are unrelated to the transferee, the BSD paid by the former cannot be refunded. Separately, on acquisition of the residential properties from the transferors, the transferee has to pay the BSD. It may claim for a refund of the BSD paid if the redevelopment is completed within six years after it becomes the owner of the whole lot. If the transferor companies are associated bodies corporate of the transferee (as defined under section 45 of the Stamp Duty Ordinance), they may claim for relief under section 45 of the Stamp Duty Ordinance in respect of transfers of residential properties from the former to the latter. The transferee may claim for a refund of the BSD paid by the transferor companies if the redevelopment is completed within six years after it becomes the owner of the whole lot.

20.	Q:	Where residential properties in a lot are acquired by several companies for joint development, will the BSD paid be refunded?

	A:	The companies, being the joint owners of the lot, may respectively claim for a refund of the BSD they separately paid at the times they acquired the various residential properties if the redevelopment is completed within six years after they become the joint owners of the whole lot.

21.	Q:	Will BSD be payable on an instrument of exchange under which a residential property is exchanged for another residential property?

	A:	If under the instrument, a non-HKPR uses his/her residential property to exchange for another residential property and has to pay a sum of money (i.e. equality money) which represents the difference in value of the two properties, BSD which is computed by reference to the equality money will be charged on the instrument and the non-HKPR is regarded as the buyer.

22.	Q:	Will BSD be payable on an instrument of exchange under which a non-residential property is exchanged for a residential property?

	A:	If a non-HKPR uses his/her non-residential property to exchange for a residential property, BSD which is computed by reference to the value of the residential property will be payable on the instrument and the non-HKPR is regarded as the buyer.

23.	Q:	When should BSD be paid?

	A:	BSD has to be paid within 30 days after the execution of the chargeable document. If the time for stamping of any instrument chargeable with BSD falls before the amended Stamp Duty Ordinance was published in the Gazette, that time for payment is to be replaced by a period of 30 days commencing immediately after the date of gazettal.

24. Q:

Will the BSD paid be refunded if the buyer and seller cancel the agreement for sale after BSD was paid?

A:
In case the agreement for sale is cancelled (other than for further resale such as confirmor sale or nomination of another buyer), the buyer can apply for refund of the BSD within 2 years after the agreement is cancelled.


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